Santander UK pulls out of RBS branch sale
RBS says it will start a “new process of disposal” following discussions with European Commission.
The Royal Bank of Scotland has received notification from Santander UK that it will be pulling out of its planned purchase of 316 UK-based branches, which the Spanish bank had agreed to acquire in August 2010.
In a notice on the London Stock Exchange, RBS said the businesses include 316 branches, broadly comprising the RBS branch business in England and Wales and the NatWest branch business in Scotland, along with certain SME and corporate activities across the UK.
The sale of the business was mandated by the European Commission in 2009 as a condition of its approval of state aid provided to RBS as part of the recapitalisation by the UK government. RBS was keen to stress that the branches would be sold by the deadline of the end of 2013.
Santander’s decision follows extensive work by both parties to separate the business into a largely standalone form and to prepare the business, customers and staff for transfer.
RBS said the decision will have no impact on the service available to customers and will continue to work to fulfil its obligations to the European Commission.
According to a report in FTAdviser sister title the Financial Times, both Virgin Money and private equity entrepreneur Christopher Flowers, founder of global investment house JC Flowers, have expressed interest in buying the branches.
Virgin Money, which acquired the nationalised 75-branch Northern Rock, lost out to Santander when RBS held the auction for the branches in 2010.
Stephen Hester, RBS group chief executive, said: “While this is a profitable part of our business that we would rather not part with, RBS has worked hard to ensure it is substantially separate from our UK branch network and corporate business and largely ready to be taken on by a new owner.
“Much of the heavy lifting associated with a transfer has already been completed, including separating data for 1.8m customers and putting in place a standalone management team.
“It is of course disappointing that Santander decided to pull out of this transaction, especially for the customers and staff involved. However, RBS’s strong progress in our restructuring plans means we can continue to provide a stable home for this business and its customers pending a further resolution.
“RBS will commence a new process of disposal following discussion with the EC and will provide a further update on this in due course.”